With an aim to develop corporate debt market in the country, Sebi on Friday decided to create a separate debt segment on stock exchanges, wherein banks would also be allowed to become trading members of the bourses and trade in this market.
"...this will help in the development of debt market on the Indian stock exchange. This will bring in more volumes and liquidity," Sebi Chairman UK Sinha said after the board meeting.
"I personally feel that it's a very positive decision and what RBI has done and today we are in Sebi trying to implement. We are implementing what RBI has done," he said.
In another decision, Sebi also decided to amend the regulations to enable two-way frangibility of Indian Depository Receipts of foreign firms listed in India, pursuant to which the investors can benefit from leveraging between the Indian and foreign securities of the concerned company.
Besides, Sebi board also approved various amendments to its regulations governing Infrastructure Debt Funds (IDFs), including allowing the tenure of such funds to be extended by up to two years with the consent of two-third investors.
With regard to the new debt segment on stock exchanges, Sebi said it will provide for trading, reporting, membership, clearing and settlement rules, risk management framework and other necessary provisions.
The move would facilitate Scheduled Commercial Banks to become members of recognised bourses for the purpose of undertaking proprietary transactions in the corporate bond market.
Besides, in order to enable direct membership of banks and other institutional participants in the debt segment, the regulator has approved some amendments related to its rules governing stock-brokers and sub-brokers.
The regulator has included debt, derivatives and currency derivatives segment in the definition of clearing members, self clearing members and trading members.
Sebi has also introduced the definition of "proprietary trading member" to permit institutions such as scheduled commercial banks, primary dealers, pension funds, provident funds, insurance companies and mutual funds for trading in the debt segment.
Regarding, IDF, Sebi said an IDF scheme would be allowed to invest upto 30 per cent of its Assets Under Management (AUM) in assets from the current ceiling of 20 per cent.
The new investment limit is subject to the condition that the sponsor/associate retains at least 30 per cent of the assets sold to the IDF till the assets are held in the IDF portfolio.